Tariff Trade: U.S. President Trump announced late last week the consideration of reciprocal tariffs on Canada as part of his administrations trade and economic strategy after relief from the most recent round of tariffs was provided earlier in the week. The president cited the Canadian tariffs for American lumber and dairy products. The comments from the president appeared to suggest that any tariffs on those American products would be matched for imported Canadian goods. Steel and aluminum tariffs are still expected to take place on March 12 according to the administration.
Canadian Elections: After Justin Trudeau announced his resignation from being the Prime Minister of Canada, a vote was held in the country to name his replacement. Mark Carney will replace the outgoing Prime Minister, as he was voted in yesterday in what some are calling a landslide victory in the process. Carney was a former central banker lead the Bank of Canada as well as the Bank of England. Some immediate policy changes that are planned according to Carney is repealing the consumer price on carbon and stopping a planned increase on capital gains taxes in the country.
Ukraine/Russia War: One of the top 2 refineries in Russia was hit in a Ukrainian drone attack over the weekend. The attack struck one of the largest storage tanks in the facility. The refinery produces about 355k bpd and makes approximately 5.3% of Russia's total gasoline, 7.6% of the nation's diesel, 3.4% of total jet fuel, and 16.3% of the nations fuel oil.
Market Overview: Markets are slightly up this morning as markets continue to digest tariffs and the potential impact on demand. Additionally, on Friday, economic data showed jobless claims increased last week bringing unemployment claims slightly over expectations. The combinations of tariffs and an increase in the jobless space spark concerns about the fragility of the economy. Additional concern was posed about inflation values remaining high -- causing renewed conversations about stagflation taking hold of the market.
HoC1(Daily)
As the financial markets erased what was considered the "Trump Bump" (the increase in market values post election) so too fell energy contract prices. Looking back to June 2024, highs on the front month heating oil contract were tested one time - recently in January. However, the values dropping from the January high, the contract price continued to break out lower. It appears at this point, a significant line of support around the 2.18 level has kept the sell off at bay, but also appears to show some level of significance through the fall of 2024 as well. If true, pending any outlier events, this could indicate that there is much less downside risk to the price of heating oil than upside. Coupled with relative strength reflecting the contract is nearing being oversold, could further indicate there is limited downward potential left on the contract.
